Are coins, polymer notes still parts of Nigeria’s monetary system?

Six years after their introduction by the Central Bank of Nigeria (CBN), the public has almost lost interest in monetary transactions involving the exchange of N5, N10, N20, and N50 polymer naira notes.

Public attitude to these notes is predicated on what economists describe as their poor quality that has somewhat reduced them, over some periods of transaction, to an insignificant difference among them and mere papers.

“In some instances, all the qualities that validate these notes as part of the Nigeria’s monetary system or legal tenders are not there altogether, including the inscriptions, rendering them inefficient in transactions,’’ Mr Tunde Egbinola, an economist notes.

Egbinola says that the currency reform carried out in 1991 in which 2 kobo and 5 kobo coins were phased out and 1 kobo, 10 kobo and 25 kobo coins were redesigned, should not have been reversed.

He observes that the subsequent coinage of 50k and N1 notes when the N50 note was put into circulation, could, somewhat be cited as the cause of sudden disappearance of coins in some business transactions.

According to him, while other developed and developing countries make use of coins for daily financial transactions, it is unfortunate that the coins, comprising 50 kobo, N1 and N2, have failed in that regard.

A fish seller in Madalla, Niger, Mrs Olufunke Popoola, says she keeps several faded denominations of polymer notes rejected by her customers.

“Except in some few banks, in buses, stores and markets, people reject the notes let alone the coins that the public believes, are not in circulation.

“Nobody can spend coins for me because another person will not collect them from me, except in big super markets and where are even the coins?

“It is better for government to tell the public not to reject the faded polymer bank notes and to campaign for the use of coins in all transactions so that the masses can survive,’’ she suggests.

A commercial driver, Mr Godwin Aideloje in Suleja, Niger, says he has faced many challenges in the collection of some faded polymer naira notes paid as fares.

According to him, on some occasions, such notes will be rejected as change for commuters’ payment and the petrol filling stations may be the final collectors.

“Although we lose some money to the filling stations arising from the unavailability of coins for change when occasions demand, the fact that the worn-out notes are collected for the fuel we buy consoles us,’’ he remarks.

In fairness, the CBN admits that the currency is no longer sustainable, promising that it will stop the issuance of polymer notes because of cost of production and impact on the environment.

Mr Ugochukwu Okoroafor, the Director of Corporate Communication Department of CBN, notes that the apex bank could have replaced the polymer notes with coins but the Federal Government stopped currency restructuring.

According to him, the CBN doesn’t print new polymer notes now but it is operating with the existing ones because they fade quickly.

To stop the abuse of the naira, he says the bank will continue “massive campaign’’ against its abuse to ensure that government does not continue to spend huge sums of money in printing new notes to replace torn ones.

But the bank’s Deputy Governor, Mr Tunde Lemo, gave the assurance that by middle of June, “we will start to produce the second generation of lower denomination notes, now in paper not in polymer.

“My plea is that Nigerians should exercise patience with us; it wasn’t the fault of the CBN.

“It was just because we had to go back to the drawing board to rethink `Project Cure’ in the light of the wish of the public that we should not go ahead with the N5,000 notes and lower denomination.

“We will correct that in the course of the year. Polymer certainly will be phased out. In fact, we are phasing out polymer. No new note is being printed in polymer now.’’

Lemo explained that at a point when the CBN decided to introduce the polymer currencies, its search showed that they could last longer than ordinary paper notes.

“However, with the benefit of hindsight, we probably should not have dumped polymer because, yes, the substrate lasts longer, but the in-consubstrate began to fade; we didn’t realise that at the time of introduction.

“So, part of `Project Cure’ was actually to move away from polymer substrate to paper, unfortunately we had a push-back because of the issues around the proposed N5, 000 note and coins.

“The entire programme was put in abeyance, otherwise by now we should have stopped producing polymer notes,’’ he said.

Lemo announced that the CBN had awarded a contract for the printing of the higher denomination notes to a foreign company because of low capacity at the Nigerian Printing and Minting Company.

Corroborating Okoroafor on the campaign on the careful handling of the naira, Lemo said that it was unfortunate that the campaign was not successful.

Nonetheless, he made it clear that it was a criminal act to abuse the naira going by the CBN Act.

“Unfortunately, CBN is not a law enforcement institution; we left that in the hands of the law enforcement institutions and that has not kicked in.

“I still go to parties and see people spraying money, stepping on money, I see touts distributing mint-fresh money that should go to customers,’’ he noted..

Worried by this trend, Lemo said the CBN had informed the police to step up its surveillance to reduce naira abuse, insisting that the bank has no legal backing to arrest people who sell the naira on the streets.

Although the act of abuse and sale of the naira by touts has defeated the clean note policy of the bank, he gave the assurance that efforts were being made to handle the challenges.

Observers say the people get the naira they deserve; adding that public handling of the currency notes should change for the better.

“A situation where the naira notes have been turned into writing sheets, even by those working in the bank, stained by meat sellers and squeezed by bus assistants will worsen the battered naira, ‘’ they say.

The also suggest that Nigerians should cultivate the habit of carrying purse and arranging the naira neatly, just as other nationals treat their currencies, while they could save the coins for exchange into currencies by the apex bank. (NANFeatures)